Jackson Consulting Unadjusted Trial Balance – December 31, 2018 Debits Credits C
ID: 2339529 • Letter: J
Question
Jackson Consulting
Unadjusted Trial Balance – December 31, 2018
Debits Credits
Cash $ 11,500
Accounts Receivable 3,500
Supplies 1,200
Prepaid Rent 24,000
Equipment 14,000
Accumulated Depreciation $1,400
Accounts Payable 1,900
Unearned Service Revenue 2,800
Common Stock 10,300
Retained Earnings 7,500
Dividends 4,500
Service Revenue 91,350
Salaries Expense 55,000
Advertising Expense 900
Utilities Expense 650
Total: Debits =$115,250 Credits total = $115,250
Additional Information:
1.) The equipment was purchased on January 1, 2017. The useful life is estimated to be 10 years.
2.) As of December 31, 2018, the company had accrued salaries of $950.
3.) Of the balance in the unearned revenue account, $500 had not been earned by year -end.
4.) On December 1, 2018, the company paid $900 for four months of advertising.
5.) A count of supplies on December 31, 2018 showed $400 of supplies had been used during the year.
6.) On May 1, 2018, the company rented an office building for one year and paid $24,000 in cash.
The adjusting journal entry to record (f) above would include:
a debit to rent expense for $10,000
a debit to prepaid rent for $16,000
a credit to rent expense for $10,000
a credit to cash for $16,000
a credit to prepaid rent for $16,000
A.a debit to rent expense for $10,000
B.a debit to prepaid rent for $16,000
C.a credit to rent expense for $10,000
D.a credit to cash for $16,000
E.a credit to prepaid rent for $16,000
Explanation / Answer
Correct answer---(e) a credit to prepaid rent for $16,000
Full journal entry will be
Rent expense $16,000
Prepaid Rent $16,000.
Rent expense of 8 months will be recorded and adjusted with prepaid rent. Balance in prepaid rent should be for 4 months, that is unexpired period of rent. Balance in prepaid rent after the adjusting entry will be $8000 (24000-16000)
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